On October 5, the US Treasury imposed new sanctions against the banking network associated with Russia and Iran known as "A7". These sanctions were enacted due to the network's role in facilitating financial transactions between the two countries and circumventing US economic sanctions. According to reports, this network acts as a "shadow banking" system for the Iranian government, which is used for transferring money and conducting illegal transactions.
Objectives of the New Sanctions
The US Treasury has claimed that this network has created mechanisms for money laundering and plays a role in illegal financial activities related to oil exports and arms purchases. According to this ministry, Iran uses these mechanisms to transfer revenue from oil sales and the financial resources necessary for acquiring weapons. These actions are part of the US efforts to pressure the Islamic Republic and limit its economic capabilities.
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Banking and Currency Transactions Between Iran and Russia
The governments of the Islamic Republic and Russia claim they do not need dollars and have increasingly settled their trade with each other in rubles and rials since 2019. These claims come as new statistics recently show that the actual share of settlements in national currencies in the trade between the two countries is only 68%. This discrepancy between statistics and claims indicates an imbalance in trade that may lead to difficulties in securing currency.
In 2023, the value of bilateral trade between Iran and Russia was estimated at around four billion dollars, which includes Russia's exports of 2.7 billion dollars and Iran's exports of 1.3 billion dollars. However, the Central Bank of Russia has pointed out issues with currencies like the rial, describing them as "non-convertible" and having "greater volatility." In this situation, Iranian exporters frequently refuse to accept rubles and, if they do, quickly convert them to dirhams.
Outcomes and Consequences
Iran and Russia, in an effort to establish a currency exchange line between their central banks, signed an agreement in 2024. However, according to reports, the only amount publicly announced from this agreement is a one billion ruble deposit in VTB Bank, valued at about 10 million dollars. This deposit is intended to cover a "potential shortage of rubles." However, the lack of further withdrawals from this credit line may lead to difficulties for both parties.
The economic issues between Iran and Russia remain complex and challenging. Reports indicate that Iranian traders currently have to use exchange offices in Dubai and Turkey to access Russian suppliers, which exacerbates the economic and transactional challenges between the two countries. Under the current circumstances, it seems that circumventing sanctions and establishing sustainable trade exchanges between the two countries will require more efforts.
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